Foreclosures Hitting the High-End Market Segments

Currently there has been a substantial amount of debate on the fact that foreclosures, currently are affecting the up-market, as they no longer remain a problem only for the sub-prime of mortgage segment. This indicates the prevalence of foreclosures among the mid- to high-end market segments. This assumption is true to some extent, as during the real estate boom that took place in 2006, the minimum number of homes that fell in the lowest strata of the one-third of the value of the homes comprised 55% in the foreclosure crisis. While the homes situated in the middle of this one-third value list accounted for 29% foreclosures and lastly the homes featuring on the top of the one-third home value list made up for 16% of the foreclosures.

In the month of July 2009, the homes in the bottom of the one-third home value list comprised of 35% homes for foreclosures, as compared to the range of 35% and 30% respectively for the homes featuring in the middle and top of the one-thirds list. These numbers reveal a huge percentage as 30% of the foreclosures are faced by the homes that are placed on the top of local values for homes. This also means that the homes at the top of the list are foreclosed the most.

The number of borrowers who are defaulting with their Prime, Alt-A and Option ARM mortgages has increased greatly. To add to this, the rate at which these delinquencies are cured and resolved is showing a negative figure. This is leading to increased number of foreclosures even among those borrowers, who are technically placed out of the purview of the sub-prime market which deals in mortgages.

According to the records of the Amherst Securities Group the number of felonies among the borrowers has increased. This has a direct and inverted relationship with the increasing negative equity and falling chances of solving the problem of mortgage delinquencies. According to the second quarter figures of Zillow, there are at least 23% homes with single families, that are lagging behind drastically with their mortgage payments. So the rate of solving the delinquencies in mortgage payments will remain low. The values of homes might be unclear in terms of foreclosure distribution. It may seem like high-end homes are more in number regarding foreclosure but the fact is that the foreclosure crisis affected the areas that have homes with high prices.

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